Tom Petters -- the Mr. Fixit of businessby Martin Moylan, Minnesota Public Radio
St. Cloud native Tom Petters likes fixing companies -- turning around apparently failed investments. He's done that with Fingerhut, Polaroid and a number of other enterprises. And now, Petters has two new fixer-uppers in Minnesota: Sun Country Airlines and the former Northwest Airlines maintenance base in Duluth.
St. Paul, Minn. — Both Sun Country and the maintenance base are classic Petters projects.
Sun Country lost about $33 million in the past two years. And in Duluth, the old Northwest base sits waiting for a tenant. Hundreds of jobs disappeared there as Northwest Airlines descended into bankruptcy.
The facility includes a hangar that can hold up to five big passenger jets. Petters thought he and some business partners could use the base to customize the interiors of large corporate jets. But he says that plan has hit a snag.
"The economics didn't work out right now for the joint venture partners," he says.
But that won't stop Petters from trying to find a business that's a good fit for the base.
Petters has been fixing businesses since he was 15, when the stereo shop he was working in went out of business. Building on connections he made at the shop, Petters started selling turntables, speakers and other audio equipment out of his parents' basement.
Petters has revived several businesses that seemed destined to die, including Fingerhut, the catalog company. Its former owner planned to shut it down.
Fingerhut is a startup that was in ashes," he says. "Everybody was laid off. Today, Fingerhut is a profitable company."
Petters also perked up Polaroid, which became famous decades ago for its instant film cameras. Petters, now 50, still relishes the role of Mr. Fix-it.
"Some people say, 'You're a bottom feeder company. You only look for opportunities when someone has failed,'" says Petters. "That's somewhat a true statement."
Petters says his forte is identifying why a company is failing and then supplying it with what it needs.
Petters doesn't have an MBA. He dropped out of college after one term. He end up a millionaire, though. He owns a house valued at more than $5 million on Lake Minnetonka.
And Petters has done well enough financially that he's been able to give millions of dollars to arts organizations, charities and schools.
Petters recently gave the College of Saint Benedict in St. Joseph $5.3 million. Petters has also donated millions in memory of his son, John, who was killed while traveling in Italy in 2004.
Politics are Petters' passion, too. He's made about $350,000 in political contributions since 2000, with about two-thirds of the money going to Republicans.
Petters doesn't have to disclose much about the finances of his privately-held company, Petters Group Worldwide, though.
"I'll give you a rough ballpark figure," he says. "Annual revenue of about $2.5 billion. Other than that, we don't publish what our profits and losses are. I'll tell you this. I've had my share of losses and I've had my share of wins. Thank God, to this point my wins have been able to cover my losses."
Petters' sales were good enough to land it on Forbes magazine's 2006 list of America's largest private companies.
There seems to be no business Petters won't try. His portfolio includes everything from designer swimsuits, flat-panel TVs and college student housing to biometric security systems, toasters and magazine publishing.
George Wozniak, who owns Hobbit Travel, is a longtime friend of Petters, and knows his business strategy very well.
"His model is identifying value in companies that either need a little money to make them prop up, or need some management to make them prop up," Wozniak says. "There is something tangible there that he identifies that can work, and then they come in with the expertise or the cash, or both."
Petters also has a knack for getting people to see things his way.
"He's the ultimate sales guy," says former Sun Country executive Shaun Nugent, who is now an industry consultant.
"He can convince banks, investment bankers, any constituency, of his position."
Petters can be candid, too. Consider Polaroid. Petters bought it primarily because its name commands great respect. Petters put the Polaroid name on flat-panel TVs, and sales have been pretty good.
But reviewers have panned the TVs as mediocre --or worse. And consumer complaints have earned Polaroid an unsatisfactory rating with the Better Business Bureau.
Petters agrees the TVs' quality must improve.
"We have run into problems that have caused considerable heartache for the company, and financial loss," says Petters. "And for customers, consumers, that's a trusted name. We want a trusted product."
Sun Country Airlines is probably the Petters business that affects Minnesota consumers the most. Petters and a local investment firm bought the airline about a year ago.
Sun Country operates at the recently renovated Humphrey Terminal at the Twin Cities airport.
Last year, Sun Country flew nearly 1.5 million local passengers. That made it the No. 2 airline in the Twin Cities market, behind Northwest. Far, far behind Northwest, of course.
Chris Wolfe of Lakeville is among the customers won over by Sun Country's low fares and nonstop flights.
"Always on time," Wolfe says. "Planes are new. Everyone is friendly. And great prices."
Sun Country regularly offers nonstop roundtrip fares to both coasts for between $200 and $250. Eagan-based Northwest consistently matches those fares, however. And Sun Country is still trying to find its way to profitability.
To thrive, Petters says Sun Country needs to better promote itself, fill more seats on its planes and perhaps raise fares a bit.
"It's tough, real tough," he says. "We've added capacity and we haven't added enough passengers yet."
Petters has no illusions of beating Northwest. But he's convinced Sun Country can be a profitable alternative to Northwest for many Twin Cities air travelers.
He's confident he can find a business that fits well with the Duluth maintenance base, too.
Petters says Polaroid might have a use for it. Or the base could be a center for the installation of on-board entertainment systems for airliners.
Petters says he has some powerful allies, including U.S. Rep. Jim Oberstar, who represents the 8th Congressional district -- which includes Duluth.
"With the support we're getting from Oberstar and the city of Duluth, and having that facility there and being we're in the aviation business, I think we'll come up with a solution," Petters says.
Duluth owns the base debt-free, as a result of a settlement the city got in the Northwest Airlines' bankruptcy.
The city's eagerness to find a tenant bodes well for Petters. That may help him get a good deal on leasing the base. Once again, Petters could have the chance to take something that's broken and profit from fixing it.
- All Things Considered, 10/09/2007, 5:50 p.m.